Olmert accused of 'intense relationship' with firm over land development in Eilat

By DAN IZENBERG
State Comptroller Micha Lindenstrauss charged on Tuesday that the front man for Acquaria, the company seeking to build a huge tourism and commercial complex near Eilat, maintained an "intensive relationship" with then-Minister of Industry, Commerce and Employment Ehud Olmert, who pushed the Investment Center to give Acquaria a $30 million grant. "A relationship was created with [Olmert,]" Lindenstrauss told the Knesset State Control Committee, which met to discuss a highly critical report issued last week by the State Comptroller on the conduct of various government bodies involved in the still ongoing process of approving the Acquaria project. "We have in our possession a significant correspondence proving that the connection between [Olmert] and the entrepreneur was very intensive." According to Lindenstrauss's report, the ministry of tourism had approved the first stage of a project, initiated by a company represented by businessman and former Israel Air Force pilot Ron Pecker, to build a tourism and commercial site on 1,300 dunams of land north of Eilat, including 300 dunams of agricultural land under cultivation for many years by Kibbutz Eilot. The Israel Lands Authority agreed to lease the land to Acquaria without a tender and assessed the value of 600 dunams, earmarked for a golf course, at NIS 7,000 per dunam. The value of the 700 dunams earmarked for the tourist attractions, commercial outlets and parking (200 dunams) was estimated at NIS 500,000 per dunam, not counting the parking space. Meanwhile, the Investment Center, which is under the aegis of the Ministry of Industry, Commerce and Employment, agreed to provide Acquaria with a $30 million grant to help the investors following strong prodding from Olmert's personal aide Oved Yehezkel. Boaz Aner, head of the government ministry division of the State Comptroller's Office, read out a long list of correspondence and meetings involving Pecker and Olmert in which Pecker had asked for Olmert's help during various stages along the way to final approval of the project. Aner also emphasized that in intervening in the Investment Center's decision, Olmert had violated a clear directive from the attorney-general regarding the Investment Center which declared that the political echelon must not interfere with the work of the professionals. Aner quoted from a letter sent by Yehezkel to Shmuel Mordechai, then head of the Investment Center, with copies to Olmert, then-director-general of the Prime Minister's Office Avigdor Yitzhaki and Acquaria, in which he had written: "Further to our telephone conversation regarding the Acquaria project, it was agreed that both parts of the process would be completed by August 2003; A. Confirmation of the project as an 'approved enterprise.' B. Provision of the grant as requested." According to Aner, Olmert had made it clear that he expected the civil servants to carry out his directive, and had not cared whether or not the project was economically feasible. And there were many reason to believe it wasn't. In the report, Lindenstrauss found seven different investigations of the feasibility of the project. None of them found that the project would be profitable for all the parties concerned, that is, the entrepreneur, the company and the national economy. According to committee chairman Michael Eitan (Likud), one of the main problems in the project appeared to be that the company planned to build a golf course on almost half the area of the project even though it knew that this was not economically viable. The company was to obtain the 600 dunams for this purpose at the extremely low price of NIS 7,000 per dunam. Why, he asked, would the initiators insist on using the land for golf if they knew it would lose money? In the report, the state comptroller said time had shown that once the Israel Lands Authority agreed to lease land for a project it was seeking to encourage, it did not become involved again even if the entrepreneur decided not to go ahead with the approved project, but to use the land for some other purpose. Even if the assessed value of the land for the new use might be much higher than the assessed value for the original use, the ILA did not try to change the lease agreement and demand more money in accordance with the new land-use. According to Eitan, one of the matters that required investigation was whether or not the golf courses were only a pretext for obtaining the land at a much lower rate, without any real intention of using it for that purpose. Eitan said the committee discussion on the Acquaria report would be continued.